High funding asks can be a strong sign that you are missing something more fundamental in your startup that needs your attention. Here’s how to keep your ask both realistic and strategic.

💥 High burn rate

A high ask is a proxy for a high burn rate: a startup might be spending too much money – on building a product, on hiring, on marketing – and not seeing commensurate growth. It’s your money going out the window.

🌪 Risk of ownership dilution

Founders’ stakes can be diluted to a sizeable degree by early high funding. That encourages a demotivational-disengagement spiral, which can impact the sustainability of a startup. 

🚨 Lack of strategic vision

Asking for a big sum before the business takes off may reveal that you don’t have a clear idea of how to get to the next period milestones, which shows poor planning and an unclear strategy for growing in the early stages. 

🚁 Overvaluation concerns

An ask that’s too high can indicate overvaluation. Usually that happens when somebody is overly optimistic and inexperienced in judging the size that the company’s markets can be in the future. A warning sign to investors adding this company to their portfolio.